An Israeli soldier walks near an armored vehicle in Qalqilya, West Bank, on August 7, 2025, during a night raid marked by confrontations with residents. The raid, part of ongoing Israeli operations in the West Bank, adds to the tension in Qalqilya, a city encircled by the Israeli separation barrier and frequently targeted in military incursions.
Mohammad Nazal | Afp | Getty Images
The world’s largest sovereign wealth fund has quit its investments in U.S. machinery manufactuer Caterpillar and five Israeli banks following a review of the companies’ ties to conflict in the West Bank.
The executive board of Norges Bank Investment Management (NBIM), which manages the fund on behalf of the Norwegian population and is valued at around $2 trillion, said Monday there was an “unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict.” The decision was based on recommendations from its ethics council, it said.
NBIM said that bulldozers manufactured by New York-listed Caterpillar were “being used by Israeli authorities in the widespread unlawful destruction of Palestinian property.” NBIM had a $2.4 billion stake in the company at the end of 2024, representing around 1.2% ownership. CNBC has contacted Caterpillar for comment.
NBIM said it will divest from banks including First International Bank of Israel and its majority owner FIBI Holdings, Bank Leumi Le Israel BM, Mizrahi Tefahot Bank and Bank Hapoalim BM. The businesses had provided financial services needed for construction activity in Israeli settlements in the West Bank, which had been “established in violation of international law,” NBIM said. CNBC has reached out to the banks for comment.
NBIM has come under growing political and public pressure to divest from its investments in firms linked to conflict in Palestinian territories, particularly with Norway heading to the polls in two weeks. In an interview with Sweden’s Dagens Industri, NBIM CEO Nicolai Tangen last week described the fund as facing a “crisis,” and said he regretted that he had not flagged an issue with the fund owning a stake in an Israeli fighter jet company while strikes on Gaza escalated.
Earlier this month, NBIM announced it would review its investments in Israeli companies in response to a request from Norway’s Ministry of Finance, which flagged questions related to the deteriorating situation in Gaza and the West Bank. NBIM also said it would sell all holdings of Israeli companies outside of its equity benchmark index “as soon as possible,” and terminate contracts with external asset managers in Israel. There were 56 Israeli companies in its benchmark index at the end of the first half of the year, which it had reduced to 38 as of Aug. 14.
The fund is meanwhile balancing its mandate to generate the highest possible net returns, while seeking to avoid any political backlash in the U.S., a supporter of Israel.
Around 55% of the fund’s equity investments are in the U.S., with 70% of its portfolio allocated to stocks. The fund’s high weighting toward the tech sector helped drive a $222 billion annual profit last year, followed by a $40 billion loss in the first quarter.
Critics of calls for Israeli divestment note that the fund continues to invest in the assets of other countries that have faced accusations of human rights violations, along with oil and other politically controversial sectors.
The Tel Aviv Stock Exchange has risen to a record high this year even as Israel has engaged in war on multiple fronts.
NBIM Deputy CEO Trond Grande told CNBC on Aug. 12 that the fund would continue to be invested in Israel via the benchmark index.
While acknowledging ” increased scrutiny” within Norway, Grande said: “What we’re doing now is really not down-weighing, I wouldn’t put it like that, but we are trying to simplify our portfolio in Israeli equities, because we have ethical guidelines as well.”
“What’s key to us is that we’re not invested in companies that could be in some way, shape or form, contributing to violating the ethical guidelines that we have,” he said.
“The exclusions by NBIM highlight the unavoidable collision between business and human rights,” Ana Nacvalovaite, research fellow at University of Oxford specializing in sovereign wealth funds, told CNBC.
NBIM “has not engaged in ad hoc sanctioning, but applied criteria long embedded in its mandate. Historical data from the fund has shown that ethical screens have barely dented long-term returns so far and in some cases improved them, it remains to be seen how this move will impact the [sovereign wealth fund’s] investments,” Nacvalovaite said.
“This has been a clear signal that the mandate is applied universally, whether to U.S. industrials or Israeli lenders.”
— CNBC’s Chloe Taylor contributed to this story.